Hawaii and US territories begin importing LNG

According to the US Energy Information Administration (EIA), America’s islands – Hawaii and the territories of Guam, the Northern Mariana Islands, American Samoa, Puerto Rico and the US Virgin Islands – face unique energy challenges because of their physical isolation and lack of fossil fuel resources. They have long been dependent on imported petroleum products, which are easier to transport than other fossil fuels. As a result, given relatively high crude oil prices in recent years, residential electricity prices on the islands have been three to five times the average residential prices of electricity on the mainland.

Both Hawaii and Puerto Rico have diversified their electric generation mix with the addition of coal plants, and Puerto Rico has one independent power plant operating on natural gas, imported as LNG at a terminal adjacent to the plant. The Puerto Rico Electric Power Authority has also converted a nearby petroleum-fired generating station to use LNG imported to that terminal and is planning to convert a second petroleum-fired station.

LNG had not been an option for most of the islands because it is typically shipped in bulk carriers in quantities far greater than many island economies can absorb. Furthermore, LNG requires expensive regasification and distribution infrastructure. However, the combination of relatively low natural gas prices and the development of standardized cryogenic shipping containers means small amounts of LNG can now be trucked, railed, and shipped like other containerized cargo.

Utilities in Hawaii and industry in Puerto Rico are now testing the economics of small-scale LNG imports. Hawaii’s first shipment using a standardized cryogenic container was completed in April, taking approximately 7100 gal. of LNG from a liquefaction plant in Boron, California, through the port of Los Angeles to Honolulu, where it was regasified and injected into the Hawaii gas distribution system. The LNG was the first nonsynthetic gas ever put into the system. Hawaii Gas typically makes a synthetic gas from a naphtha feedstock produced in one of Hawaii’s two crude oil refineries.

Also this spring, power utility Hawaiian Electric took bids on having LNG delivered in similar standardized containers to eight generating plants on Hawaii’s give main islands, requesting 800 000 t annually. The utility is evaluating whether LNG prices are sufficiently favourable to justify switching away from diesel and residual fuel oils currently used at some of its generating capacity.

In Puerto Rico this fall, two privately owned bottling plants in the island’s industrial north will begin receiving containerized LNG shipments. The LNG will be procured through third-party suppliers from southeastern US peak-shaving plants, shipped from Jacksonville, Florida.